XML 32 R18.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes |
(11) | Income Taxes
Total income tax expense (benefit) consists of the following:
|  | Current |  |  | Deferred |  |  | Total |
|  | (In thousands) |
Fiscal 2017: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 3,231 |  |  | $ | 8,092 |  |  | $ | 11,323 |
State |  |  | 836 |  |  |  | 1,435 |  |  |  | 2,271 |
|  | $ | 4,067 |  |  | $ | 9,527 |  |  | $ | 13,594 |
Fiscal 2016: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 9,635 |  |  | $ | (652 | ) |  | $ | 8,983 |
State |  |  | 1,712 |  |  |  | 355 |  |  |  | 2,067 |
|  | $ | 11,347 |  |  | $ | (297 | ) |  | $ | 11,050 |
Fiscal 2015: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 7,478 |  |  | $ | 378 |  |  | $ | 7,856 |
State |  |  | 1,558 |  |  |  | 37 |  |  |  | 1,595 |
|  | $ | 9,036 |  |  | $ | 415 |  |  | $ | 9,451 |
The provision for income taxes differs from the amounts computed by applying the federal statutory tax rate of 35% to earnings before income taxes, as follows:
|  | Year Ended |
|  | December 31, 2017 |  |  | January 1, 2017 |  |  | January 3, 2016 |
|  | (In thousands) |
Tax expense at statutory rate |  | $ | 5,144 |  |  | $ | 9,778 |  |  | $ | 8,662 |
State taxes, net of federal benefit |  |  | 658 |  |  |  | 1,244 |  |  |  | 1,118 |
Federal rate change and other |  |  | 7,792 |  |  |  | 28 |  |  |  | (329 | )
|  | $ | 13,594 |  |  | $ | 11,050 |  |  | $ | 9,451 |
The provision for income taxes for fiscal 2017 reflects a charge of $5.5 million to revalue existing net deferred tax assets as a result of the enactment of the Tax Cuts and Jobs Act (“TCJA”) in December 2017, which will reduce the federal corporate income tax rate from 35.0% to 21.0%. Additionally, the provision for income taxes for fiscal 2017 includes a charge of $0.9 million, excluding the federal income tax benefit, to establish a valuation allowance related to unused California Enterprise Zone Tax Credits, as well as a provision of $1.7 million related to non-deductible goodwill impairment. See Note 4 to the Notes to Consolidated Financial Statements for a further discussion of goodwill. The provision for income taxes for fiscal 2016 reflects the write-off of deferred tax assets related to share-based compensation of $0.5 million, partially offset by an increase in Work Opportunity Tax Credits. Deferred tax assets and liabilities as of December 31, 2017 are tax-effected based on the 21.0% federal corporate income tax rate under the recently-enacted TCJA, while deferred tax assets and liabilities as of January 1, 2017 are tax-effected based on the previous 35.0% federal corporate income tax rate. Deferred tax assets and liabilities consist of the following tax-effected temporary differences:
|  | December 31, 2017 |  |  | January 1, 2017 |
|  | (In thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Deferred rent |  | $ | 5,076 |  |  | $ | 8,389 |
Insurance liabilities |  |  | 2,762 |  |  |  | 4,365 |
Employee benefit-related liabilities |  |  | 2,726 |  |  |  | 4,044 |
Inventory |  |  | 1,635 |  |  |  | 3,174 |
California Enterprise Zone Tax Credits |  |  | 1,451 |  |  |  | 1,542 |
Gift card liability |  |  | 1,033 |  |  |  | 1,420 |
Share-based compensation |  |  | 891 |  |  |  | 1,512 |
Deferred lease revenue |  |  | 803 |  |  |  | 1,595 |
Allowance for sales returns |  |  | 294 |  |  |  | 558 |
Other |  |  | 491 |  |  |  | 1,572 |
Gross deferred tax assets |  |  | 17,162 |  |  |  | 28,171 |
Less: Valuation allowance |  |  | (876 | ) |  |  | — |
Deferred tax assets, net of valuation allowance |  |  | 16,286 |  |  |  | 28,171 |
Federal liability on state deferred tax assets |  |  | (1,234 | ) |  |  | (2,559 | )
Basis difference in fixed assets |  |  | (476 | ) |  |  | (1,913 | )
Prepaid expense |  |  | (404 | ) |  |  | — |
Deferred tax liabilities |  |  | (2,114 | ) |  |  | (4,472 | )
Net deferred tax assets |  | $ | 14,172 |  |  | $ | 23,699 |
In fiscal 2017, the Company established a valuation allowance of $0.9 million related to unused California Enterprise Zone Tax Credits, which the Company will no longer be able to carry forward beyond 2024 as a result of California’s termination of this program. The Company had no valuation allowance as of January 1, 2017. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections of future taxable income over the periods during which the deferred tax assets are deductible, except as noted above, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced if estimates of future taxable income are reduced. The Company files a consolidated federal income tax return and files tax returns in various state and local jurisdictions. The statutes of limitations for its consolidated federal income tax returns are open for fiscal years 2014 and after, and state and local income tax returns are open for fiscal years 2013 and after. As of December 31, 2017 and January 1, 2017, the Company had no unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate over the next 12 months. The Company’s policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expense. As of December 31, 2017 and January 1, 2017, the Company had no accrued interest or penalties.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration